Startup culture has gathered both pace and popularity greatly in recent times, and today, many young and aspiring entrepreneurs are taking the leap and launching their own businesses. While startups are being founded in various sectors, some seem to be more sought than others. Top among these is the eCommerce industry, which boasts of around $3.5 trillion worth of sales globally.

It’s no wonder that many aspiring businesspersons are keen on launching eCommerce startups. If you count yourself among them, you no doubt already have the passion to set up your own online store. What you need to focus on then is the eCommerce startup funding. A big part of securing your eCommerce startup funding is learning about the mistakes you need to avoid.

So, let’s take a closer look at 4 common mistakes people make while raising their eCommerce startup funding.

Raising funds too early

There’s a lot of valid advice about eCommerce startup funding. And if you sift through all the chatter, you’ll realize that one of the most fundamental things to take care of is timing. It’s important to time your fundraising efforts well, so you don’t raise funds too early or too late. The latter is a pitfall that most startups avoid. But raising funds too early is a common mistake that many eCommerce businesses may be guilty of. One should never rush into decisions without prior planning.

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It can be tempting to rush in and request funding right away, but that could prove to be a costly error of judgment. If you apply for funding even before you have done the required work and put in the efforts necessary to reduce the investment risk associated with your startup. This greatly increases your chances of securing funding when you do apply, as opposed to applying too early and then suffering a rejection. Fundraising should always be initiated with prior planning.

Requesting less money than needed

Entrepreneurs and founders are often guilty of asking for less funding than they actually need. Many startups do this in a bid to make it easier to secure funding. The faulty logic here is that founders often believe if they request a smaller amount, their investors may be more likely to seal the deal. Some investors may even test the waters by deliberately offering a lower valuation. And here’s where many startups cave in. But that’s not how eCommerce startup funding works. One should always demand as per the rightful valuation of the company.

Your investors will essentially rely on realistic financial projections and your business plan to determine whether or not to fund your startup. The amount, by itself, has little to no bearing on your case. So, avoid the temptation to undersell your needs, and simply focus on putting across an honest and well-researched pitch.

Ignoring the funds needed to scale up

Startup funding is not merely to support the day-to-day business of your eCommerce store. In essence, it is also needed to scale up your business organically. This could involve a mix of various strategies like product marketing, focused sales, improvement of product lines, social media marketing, and more. All these efforts take money, and your eCommerce startup funding needs to account for these aspects.

Many founders ignore the process of scaling up and fail to factor in plans for business expansion at the time of fundraising. This puts them at a disadvantage down the line when it’s time to scale up and there isn’t adequate funding to rely on for the same. This is another key mistake that you need to avoid when you go about raising funds for your eCommerce startup.

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Pitching to the wrong investors

Your investors will no doubt research your business adequately before they agree to fund your startup. But did you know that it is also essential for you to research your investors before approaching them for your eCommerce startup funding? Unfortunately, many founders overlook the importance of research, which is vital to help pick the right investor.

Research helps you pitch your startup to investors who have a good understanding of the industry you operate in. Take a look at the investor’s portfolio, understand how your startup fits into that ecosystem, and use that to your advantage in your pitch. This helps align the investors’ interests with yours, thereby making it easier to secure funding.

Summing up

These mistakes may seem obvious to you, now that you’re aware of the pitfalls. But you’d be surprised how common they are, and how easy it is to overlook these important areas. So, ensure that you remain vigilant when you go about securing your eCommerce startup funding. By keeping an eye out and learning from the mistakes of those who went before you, you can get your startup’s funding just right the first time.